India’s stock market is on the cusp of significant growth, according to a survey conducted by Bloomberg. With the anticipation of the upcoming government budget, strategists and investors are optimistic about a boost in consumer spending and infrastructure development. This positive outlook suggests a promising year ahead for India’s $5 trillion stock market, which could see gains of up to 20%.

Government Spending and Corporate Earnings to Drive Growth

The key drivers behind this optimistic forecast include increased government spending and sustained momentum in corporate earnings. More than half of the 24 respondents in the Bloomberg survey estimated that the NSE Nifty 50 Index could rise to 26,000 points by the end of 2024, with one respondent predicting an even higher climb. Currently, the benchmark index has already risen 12% this year, reaching a record high.

Political Shifts and Sectoral Bets

Recent elections have seen a diminished majority for Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP). This political shift has led investors to place higher bets on the consumer sector, anticipating that the government may adopt more populist measures to maintain support. Additionally, an early monsoon has bolstered the prospects for companies involved in agriculture, particularly those dealing with crops such as rice, corn, and soybeans.

Positive Corporate Earnings Outlook

Bino Pathiparampil, head of research at Mumbai-based Elara Capital, noted that corporate earnings for the previous year were robust, thanks to margin tailwinds. He expects earnings to grow above trend in the financial year 2025, reinforcing India’s medium-term growth story. This positive earnings outlook, combined with the expected boost from government policies, suggests a favorable environment for the stock market.

The upcoming government budget, coupled with continued corporate earnings growth, paints a bright picture for India’s stock market. Investors and strategists are confident that these factors will drive significant gains, potentially making 2024 a standout year for Indian equities. As the nation moves towards its $5 trillion stock market target, the combination of strategic government spending and a resilient corporate sector will be key to sustaining this momentum.